Job-work valuation under Rule 10A: retained waste and scrap was not additional consideration, and recovery was stayed.

In job-work valuation under Rule 10A of the Central Excise Valuation Rules, retained waste and scrap is not treated as additional consideration where duty is already paid on the principal's sale price. On that basis, the demand relying on such retained waste and scrap did not justify pre-deposit. The material also disclosed a strong prima facie case on the remaining demand, supported by an earlier similar order that had been set aside by the High Court. Recovery of the duty, interest and penalty was stayed during pendency of the appeal.

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Issues: Whether, in a stay application arising out of a central excise demand, the value of waste and scrap retained by a job worker could be treated as additional consideration so as to justify pre-deposit of the duty, interest and penalty demanded.

Analysis: The demand was substantially based on clearances made in the course of job work. The applicants were paying duty on the sale price in terms of Rule 10A of the Central Excise Valuation Rules, and on that footing the retained waste and scrap could not be treated as an extra consideration forming part of the assessable value. For the remaining portion of the demand, the applicants showed a strong prima facie case, including support from the earlier order in a similar matter which had been set aside by the High Court.

Conclusion: The applicants made out a strong case for waiver of pre-deposit, and recovery of the duty, interest and penalty was stayed during pendency of the appeal.

Ratio Decidendi: In job-work valuation under Rule 10A of the Central Excise Valuation Rules, retained waste and scrap is not, by itself, to be treated as additional consideration where duty is already being paid on the principal's sale price.

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